Hugo Boss urges investors to reject £1.7bn bid from Mike Ashley’s Frasers
Hugo Boss has urged its investors to reject the “inadequate” £1.7bn takeover tabled by Mike Ashley’s Frasers Group.
The retail giant behind Sports Direct and House of Fraser currently owns around 26 per cent of Hugo Boss but launched a move to take full control last month.
The FTSE 250 group, which was founded by British billionaire Mike Ashley, offered to pay nearly €2bn (£1.7bn) – or €38 per share – for the remainder of the business.
On Thursday, members of Hugo Boss’s management and supervisory board said they “unanimously recommend that shareholders do not accept” the offer.
After a “comprehensive and independent review process” the German fashion house has concluded that the deal would be “inadequate from a financial point of view”.
The firm said it consulted bankers at the Bank of America and Goldman Sachs before deciding that the offer price neither reflects the “standalone value” of Hugo Boss “nor its medium to long-term value creation potential”.
Hugo Boss sales slip admit turnaround
The four per cent premium offered by Frasers’ bid raised eyebrows among analysts. Stock broker Panmure Liberum said the “modest” offer suggested Ashley’s group was not necessarily looking for “full control” of the fashion house.
Hugo Boss said on Thursday that Frasers’ bid is designed merely to increase its shareholding and that Ashley’s group “does not envisage specific changes or measures affecting current business activities” of the firm.
In December, Hugo Boss launched a strategic overhaul aimed at delivering “sustainable, profitable growth” and accelerating cash generation.
The fashion house said it expects currency-adjusted sales to fall by mid to high single digits this year as a result of the “deliberate realignment,” before returning to growth next year.
Its sales fell by six per cent year on year to €905m in the first quarter of this year, as it reaffirmed full-year earnings targets of between €300m and €350m.
But the German fashion giant insisted that it is on the right track to become “the leading premium, tech driven, customer centric global fashion platform”.
Control over Hugo Boss would accelerate Frasers’ move into high-end fashion, after a years-long pursuit of the luxury label.
Frasers eyes high fashion expansion
The fashion conglomerate installed chief executive Michael Murray on the supervisory board of Hugo Boss last year, and later warned that it would vote against any future dividend payments proposed by the firm.
Frasers and Ashley have garnered a reputation for taking large stakes in rival retailers, before using this position to make larger plays.
The group launched a takeover bid of luxury bagmaker Mulberry in 2024 but was slapped down by the firm’s owner, which reaffirmed its confidence in its turnaround plan.
Last year, Ashley also failed in his bid to join the board of fast-fashion giant Boohoo, in which Frasers is the largest shareholder.
Frasers opened flat at 731p on Thursday while Frankfurt-listed Hugo Boss inched up 0.2 per cent to €37.